In terms of investment, people buy Unit Linked Insurance Policy ie ULIP. The government has also made rules for ULIPs. These keep on changing from time to time.
There are different rules regarding the insurance policy. If you take a policy and do not know these rules, then you may have to suffer a lot. In such a situation, it is very important for you to keep their information. In terms of investment, people buy Unit Linked Insurance Policy ie ULIP. The government has also made rules for ULIPs. These keep changing from time to time. In such a situation, it becomes important for you to know about them.Also Read: If you are traveling by IndiGo flight then avail these services for just Rs.600
The government has imposed tax on the amount received on the maturity of Unit Linked Insurance Policy i.e. ULIP. Earlier, the amount received on maturity was tax free under section 10(10D), but from April 1, you will be able to get tax free amount under this section only if your investment is less than 2.50 lakhs annually. That is, you will have to pay tax on the amount received on the maturity of ULIC on investment of more than Rs 2.50 lakh annually. However, this rule will be effective on policies sold after February 1, 2021.Also Read: Indane LPG Connection: Get this service at your doorstep with just a missed call, WhatsApp message, SMS on these numbers
Capital Gains will be taxed
Capital gains made on ULIPs after the announcement of the government will be taxed in the same way as mutual funds. Gains above Rs 1 lakh in a financial year attract 10 per cent long term capital gains tax. From now on, ULIPs with annual premium of more than Rs 2.5 lakh will not get this benefit of tax exemption.
If you want to get the benefit of tax exemption on the maturity of ULIP, then your Sum Assured should be 10 times the annual premium. If it is less than this then the government will have to pay tax on maturity.Also Read: SBI Offers: Great offers from SBI in the festive season, special benefits to customers on all loans and FDs
And under what conditions will tax be levied?
The government has made many other rules, under which you may have to pay tax on the maturity of ULIP. You will still have to pay tax if your equity component is more than 65 per cent. In this case LTCG tax will be applicable. On the other hand, if the equity component is 65 percent or less, then 20 percent tax will be applicable under debt funds.Also Read: LIC: By investing 6 thousand rupees a month, got 28 lakhs, pension of Rs 15000 on maturity also
What is ULIP?
It is a unit linked insurance product. Its special thing is that here the benefits of insurance and investment come together. These are offered by insurance companies. When paying the premium of a ULIP, a part of it is used by the insurance company to provide you insurance coverage and the rest is used to invest in debt and equities. The combination of insurance and investment in ULIPs comes with a lock-in period of 5 years.Also Read: EPFO: Transfer PF money to another bank account sitting at home, know the easy way quickly